Warehouse Solar Case Study: Inside a 5-Year Payback
Abstract percentages don't make the case for commercial solar — a line-by-line breakdown does. Here's a representative 700 kW rooftop project on a mid-size distribution center, modeled end to end, that reaches payback in about five years and clears well over a million dollars in net savings across 25.
The Facility
Our example is a 120,000 sq ft distribution warehouse with a roughly $9,500 monthly electric bill — a typical mid-market logistics building. Its flat roof easily hosts a 700 kW array, and daytime operations mean most of the generation is consumed on-site rather than exported.
At commercial scale, installed cost runs far below residential. Where a homeowner pays around $2.95 per watt, a project this size installs closer to $1.40 per watt, putting gross system cost just under a million dollars before any incentives.
The Federal Stack
This illustration assumes the project is under 1 MW and applies a commonly cited 30% Section 48E base — roughly $290,000 against a $980,000 system — and then adds ten percentage points for a domestic-content or energy-community adder. That is a model, not a determination that the project earns the credit. Reviewed Oct 2026, general information, not tax advice.
Then comes depreciation. Solar is 5-year MACRS property, and with 100% bonus depreciation the business deducts the full depreciable basis — system cost minus half the credit — in year one. At a combined ~26% tax rate, that shield is worth roughly another $215,000. Between the credit and depreciation, federal benefits alone cover more than half the project before a single kilowatt-hour of savings.
The Energy Savings
A 700 kW array in this climate produces on the order of 900,000 kWh a year. Offsetting consumption at a commercial rate, that's roughly $110,000 in first-year energy savings — and it grows as utility rates inflate, even as panel output degrades a fraction of a percent annually.
If the site adds storage to shave its monthly demand peaks, the demand-charge savings stack on top. For a facility where demand charges are a meaningful share of the bill, that addition can shorten payback further while adding outage resilience.
The Payback Math
In this illustration, net cost after the assumed credit and depreciation lands near $475,000. Against roughly $110,000 of first-year savings that escalates over time, the model crosses breakeven in about five years. Those figures are not a settled tax result.
Over the full system life, cumulative net savings clear seven figures. The energy-community or domestic-content bonus pulls payback under five years and pushes lifetime savings higher still.
What Makes or Breaks It
Three things move this analysis most: the utility rate (higher rates shorten payback), the demand-charge structure (which determines whether a battery earns its keep), and timing against the begin-construction deadline that governs the most favorable credit treatment.
The numbers here are a model, not a quote — but they're generated by the same engine behind SolarIQ's commercial calculator. Plug in your own bill and state to produce the equivalent breakdown for your building.